12 December 2002, Volume 1, Number 3
PRIVATE INVESTMENT BOGGED DOWN BY RED TAPEBy T. Goudsouzian
This scenario would have a familiar ring for Kafka aficionados. A project proposal is passed from desk to desk. The applicant is scrutinized by an apathetic official. He is asked to hand his documents to the clerk on the second floor. The clerk, in turn, asks the applicant to obtain approval from the bureaucrat on the third floor. The bureaucrat suspiciously eyes the proposal and suggests the applicant first visit the head of the section on the fourth floor. This, however, is not taking place in Central Europe but in war-ravaged South Asia.
Private investment is crucial to the reconstruction of Afghanistan, but many investors are dissuaded by excessive red tape, bureaucratic labyrinths, and the absence of security. In spite of the much-hyped set of private-investment laws recently announced by the government of President Hamid Karzai, many complain of a gap between theory and practice.
"Those who come up with these laws and those who will implement them are two different creatures," said Ali Seraj, an Afghan-American businessman who is involved in a number of humanitarian projects in Afghanistan.
The officials who come up with these laws are sometimes unaware of the bottleneck caused by small-time bureaucrats who have held their posts since the days of Soviet occupation, civil war, and the ruling Taliban regime.
"These people have seen governments come and go. All they care about is their own security and their paycheck. They don't have confidence in any government or its laws. As such, they give investors the runaround," Seraj said.
Before the communist takeover in 1978, Seraj ran a number of successful businesses in Kabul, including nightclubs, restaurants, a tourism office, and a taxi company. One of his nightclubs still stands in the affluent Wazir Akbar Khan district. The Golden Lotus, which he was forced to abandon, is now operated by six local Afghans. A shadow of its former self, the club is now a favorite eatery for diplomats, aid workers, journalists, and government officials.
After 23 years of exile, Seraj -- the grandson of Afghanistan's King Habibullah Khan (1901-1919) -- returned from Connecticut to his war-ravaged homeland in February to take part in the massive reconstruction process. Since then, he has made several trips to Afghanistan, mainly to assess the needs of the volatile southern region, which he feels is neglected.
"Afghanistan today is the most ideal place for those who want to invest, either on a short-term or long-term basis. Twenty-three years of war have left the country's infrastructure in ruins, and Afghanistan is in need of almost everything, be it consumer products, such as electronics, food, and clothing, or industrial development, anything from cement to plastics to construction material and iron smelting," he said.
According to Seraj, Afghanistan cannot afford to be dependent on the pledges of donor countries. To avoid this scenario and to experience sustained development, he believes the formation of a strong private sector is imperative.
"The donor nations' commitments at the Tokyo conference last December were written on ice and left under the sun. A very small amount of that has trickled into Afghanistan, and the majority has still not materialized. It's going to take a lot more. Even if all the money committed in Tokyo is released, that's still just the icing [but not the cake itself]. It is going to take approximately $30 billion, give or take, to rebuild Afghanistan. And if this money is not forthcoming from the donor nations, then it has to be raised from other sources, namely the private sector," he said.
"They have devised the private-investment laws, and they are good laws," he continued, citing a 10-year tax break and the right for foreigners to own land and property. "But equally important is how well these laws are implemented. The paperwork and red tape must be eliminated."
Seraj believes that the creation of a strong private sector must be actively encouraged by the government, and this is essential to create employment and fill the gap that now exists between government officials and low-level public servants who are inadvertently stunting the country's economic progress.
"During the course of two decades of occupation and war, the government employees, who made up the majority of the working class in Afghanistan, banded together to form a very solid, hard, impenetrable core within the economy to safeguard their interests.... Since these people depended on the government for their livelihood, they became very protective of their livelihood and as such, very suspicious of not only governments but also each other," Seraj explained.
"The directives issued by the government do not easily penetrate this hard core, and this has created a form of stagnation in the economy. To break through this hard core, the vacuum that exists between this core of government employees and top government officials must be filled by the private sector. A private sector would create jobs that would draw people from this hard core into the private sector, thereby opening up the gateway between the government and the technocrats and bureaucrats," Seraj added.
Seraj said investors are not facing any major problems right now, because "investors are not there!"
"Small investment projects that do not need red tape have gone through. For instance, there is one small plastic factory producing windows and doors in Kabul. It's an Afghan-Turkish joint venture. They have two employees," he said. "There are also a number of restaurants, small hotels, and guest houses. There are construction projects, but these are mostly individuals building their own homes.
"The big investors must be encouraged to come, and this means the government must start implementing the laws quickly, fairly and expeditiously, because the sooner they do that, the sooner the investors will flow into the country," he said.
Ahmed Khan Achikzai, chairman of the Dubai-based Savanna International Telecommunication, echoed these sentiments but expressed optimism that the situation is improving. "Businessmen are the most opportunistic people, but they are also very careful. If there is an opportunity to make big money, they will find it, but if there is any risk, they will think twice," he said.
"No doubt, there are flaws in the system, which is why many businessmen have hesitated to come and invest in Afghanistan. Red tape is one factor. Also, the government is not able at the moment to provide security for their properties and factories. But where in the world can the government provide 100 percent security?" Achikzai said.
For the past four years, Achikzai, whose father led the first jihad uprising in greater Kandahar against the communists in 1979, has lived between Dubai and Gulistan, a district bordering Afghanistan and Pakistan. He took over as chief of the Achikzai (Pashtun) tribe in 1990, when his father and two brothers were assassinated in a road ambush by communists.
Last December, he began conducting "cautious" business in Afghanistan through "direct marketing," a fancy term for word of mouth.
Achikzai believes that businessmen will find a wealth of opportunities to make money in Afghanistan. "Afghanistan is virgin territory in every field, whether trade, mineral exploration, [or] oil and gas. The possibilities are endless. If they are exploited, prosperity will come," he said. "Afghanistan is located at the crossroads of China, the Indian subcontinent, CIS countries, and Russia. If it becomes a tax-free trade hub, it will give investors access to a very big market. There are more than 2 billion people living in this area."
Investors should also be encouraged by moves to improve the logistics for trade. The government recently reached an agreement with a British company to develop five major airports in Afghanistan. These would include international, commercial, and cargo airports across the country. Negotiations are also under way on an agreement to extend train tracks from the northwest into Afghanistan proper so that goods shipped will no longer be dropped off at the border.
The biggest project being financed by donor states so far is the rebuilding of the highway from Kabul to Herat, which is being funded by the United States, Japan, and Saudi Arabia at a total cost of $180 million (see "RFE/RL Newsline," 11 November 2002). This road is one of the most important corridors for commerce in Afghanistan, as it facilitates transport and reduces time.
Achikzai lauded the new investment laws and expressed confidence that "slowly, slowly" the government will overcome security issues and other glitches in the system.
"The government is planning to train a 70,000-strong Afghan national army, which will be dispersed across the country, in all provinces," he said, indicating this will improve conditions for those who want to invest in projects outside Kabul (see "RFE/RL Afghanistan Report," 5 December 2002).
Warlords Seek Investors
There has been criticism that efforts to restore normalcy are focused exclusively on the capital, while distant provinces are neglected. With national troops posted in various provinces, Achikzai believes investors will be more inclined to explore possibilities outside Kabul.
Warlords will still pose a problem for those unaccustomed to the modus operandi of trade in Afghanistan, he conceded. The reigning warlord of any given province will demand a share of the profits, a partnership, or "grease" money, he said.
"Warlordism has been reduced by about 60 percent this year, but until it is totally eradicated, you have to work [within] the system if you want to get things done," he said.
Achikzai advises foreign businessmen to go to areas where they have "connections" and Afghan businessmen who have been away from the country for a very long time to go to their hometowns, as they will be received better. "It's not difficult. Investors are welcome. Even the warlords know that the country needs them now, and they are actively inviting investors," he said.
Achikzai especially called on Afghan expatriates to come forth and invest, in spite of the less-than-favorable conditions. "If the country were not in such a [poor] state, we would not need them to come in and invest. But Afghanistan needs its people now to help rebuild," he said. "After 23 years of war, they should not expect order and efficiency. There will be bumpy roads, cold weather, some discomfort. There may not be electricity. But if everything were OK, we wouldn't need them to come in the first place. We need their skills, which they [have] acquired over the past 30 years outside the country. They should share some of their wealth with their brothers. They should bear some of the hardships. Otherwise, how can they claim they sympathize with their countrymen?" Achikzai said.
T. Goudsouzian is a journalist who covers Afghanistan.
HUMAN RIGHTS WATCH CRITICIZES AFGHAN WARLORDS AND RECOMMENDS THE EXPANSION OF ISAF...In a report issued on 5 December titled "Afghanistan's Bonn Agreement One Year Later: A Catalog of Missed Opportunities," Human Rights Watch (HRW) concluded that in key areas such as "human rights, public security, the rule of law, and economic reconstruction," the processes that were set in motion by the 2001 Bonn Agreement "are now faltering." In the area of human rights, "the primary problem is the continuing power of Afghanistan's warlords," according to HRW. The report also claims that warlords are "the primary threat to peace and stability" in Afghanistan and the reason it has been "impossible for the Afghan Transitional Administration to establish its authority beyond Kabul." The report also criticizes the United States for arming Afghan warlords "as late as October 2002." Furthermore, HRW alleges that Iran and Pakistan "continue to supply and assist" the Afghan warlords.
The HRW report adds that the marked improvement of security and the human rights situation in Kabul is "largely because of the introduction of the International Security Assistance Force (ISAF) and the heavy international presence" there. In support of President Hamid Karzai's requests that the United Nations extend ISAF's mandate beyond Kabul, HRW recommends that the force "should be expanded as soon as possible" and that the "U.S. and coalition forces should offer necessary assistance to enable ISAF expansion." On 2 December, German Foreign Minster Joschka Fischer categorically rejected expansion of ISAF's mandate (see "RFE/RL Afghanistan Report," 5 December 2002). (Amin Tarzi)
...AS PAKISTAN ALSO CALLS FOR THE EXPANSION OF ISAF...Pakistani Ambassador to the United Nations Munir Akram on 6 December urged the UN to expand the mandate of ISAF beyond Kabul in order to allow President Karzai to extend his control throughout Afghanistan, the Karachi daily "Dawn" reported on 8 December. Akram told the UN General Assembly that Pakistan is "heartened by initiatives taken by the U.S. forces in Afghanistan to provide greater security and confidence through direct interaction with the Afghans in various parts of the country" and that Islamabad welcomes "the intention of the Afghan government to disarm the different armed factions and militias in various parts of the country," "Dawn" reported. (Amin Tarzi)
...AND 'ANIS' COMMENTS ON ISAF AND THE NEW U.S. SECURITY POLICY IN AFGHANISTAN...Stating that from the outset, President Karzai and other Afghan leaders have called for the expansion of ISAF beyond the Afghan capital (see "RFE/RL Newsline," 26 and 27 November 2002), the Kabul daily "Anis" in a 10 December commentary gave a cautious welcome to the U.S. command's decision to deploy a number of U.S. and British forces in Afghan provinces other than Kabul (see "RFE/RL Newsline," 13 November 2002). Commenting that the United States was the first country to object to the presence of ISAF in Afghan provinces, "Anis" wrote that the new U.S. policy is a "good piece of news" despite the fact that the scope and time frame of the U.S. deployment is not clear. The paper also wrote that the United States should respect "special Afghan traditions" and that "issues that are sensitive among rural Afghans must not be touched," without explaining what those sensitive issues might be. (Amin Tarzi)
...INTERNATIONAL FORCES IN AFGHANISTAN STATIONED IN GARDAYZ.Commander Mohammad Ismail Zazai, spokesperson for Afghanistan's 3rd Army Corps, said on 11 December that about 200 troops belonging to ISAF arrived in Gardayz, the capital of Paktiya Province, on 10 December and "more troops will arrive...soon," Afghan Islamic Press (AIP) reported on 11 December. Zazai added that a treaty has been signed between the Afghan Army and ISAF under which armed units in Logar, Paktiya, Ghazni, Paktika, and Khost provinces "should surrender their weapons to the 3rd Corps within 10 days; otherwise, Afghan security forces and the ISAF will conduct joint operations against them," AIP reported. RFE/RL's Radio Free Afghanistan reported on 12 December, citing the Kabul daily "Arman-e Melli," that U.S. military spokesman Colonel Roger King has said a number of coalition forces are in Paktiya and that the decision to send the forces there was made following discussions with President Karzai. The forces in Paktiya are not part of ISAF but are part of the international coalition forces stationed in Afghanistan as part of Operation Enduring Freedom, which some are confusing with ISAF
U.S. special presidential envoy for Afghanistan, Zalmay Khalilzad, told Radio Free Afghanistan in an exclusive interview on 11 December that the expansion of ISAF is not in the cards but that what is being planned in the near future is the expansion of coalition forces and the introduction of a new U.S.-trained Afghan national army and "some other forces" into various Afghan provinces. Khalilzad pointed to the deployment of forces in Gardayz as an example of this policy. Khalilzad did not elaborate on the nationality, number, or the exact mission of the forces being deployed in eastern Afghanistan. (Amin Tarzi)
FRENCH OFFICIALS ADMIT DOUBTS ABOUT PLANS FOR NEW AFGHAN ARMY.French defense officials have indicated that it is "highly unrealistic" that Afghanistan will be able to create a national army of 60,000 troops by the target date of 2009, the Karachi daily "Dawn" reported on the 5 December. Since May of this year, France and the United States have succeeded in training fewer than 2,000 troops, the report added. French defense officials estimated that Afghanistan could count on training no more than 20,000 troops by 2009 and said that the "few troops that have been [trained] remain highly undisciplined, with many of the men still unable to march in close-order military [formation]," "Dawn" added.
According to the report, France is planning to propose that Afghanistan assume greater responsibility for training its new military forces and that France will try to limit its role to providing training to Afghan instructors instead of training troops directly.
In a decree of 1 December (see "RFE/RL Afghanistan Report," 5 December 2002), Karzai proposed the formation of an Afghan army of no more than 70,000 troops, but he still has not established a target date. The problems relating to the formation of a national army extend beyond training and go straight to the heart of the future stability and viability of the Afghan state. This was best summarized in the 5 December report of Human Rights Watch (see above): "Men such as Daoud Khan, a Tajik commander in the northeast; General Abdul Rashid Dostum, the military commander of northern forces and the deputy defense minister; Ismail Khan, the governor of Herat, Gul Agha Sherzai; the governor of Kandahar, and Karim Khalili, a vice president, continue to command local armies whose primary loyalty is to them personally and not to central government [headed by Hamid Karzai]. Most significant is Afghanistan's defense minister, General Mohammad Qasim Fahim, who continues to command an army whose primary allegiance is to him. There are several smaller warlords in the southeast and central areas who also command local forces." (Amin Tarzi)
AFGHAN JUDGE INVOLVED IN CONTROVERSY JOINS UNICEF.Marziya Basel, a female judge who was reportedly dismissed in November after she had been seen without a headscarf in photographs taken during her meeting in Washington with U.S. President George W. Bush and First Lady Laura Bush (see "RFE/RL Newsline," 4 November 2002), has left the judgeship voluntarily to take a position at UNICEF, the "Los Angeles Times" reported on 9 December. Basel said she left her position as a judge, which paid her a monthly salary of about $54, to join "UNICEF, where she is building a juvenile-justice program," the daily added.
According to the "Los Angeles Times" report, Basel blamed the media and not the Afghan government for "creating the furor," saying that the "Afghan media don't want to learn and be educated. If women are strong and educated, it will be a problem for them." She said that, as Muslim woman, it is good if she wears the "chadar" (veil or headscarf), "but if we [Muslim women] don't, it's all right," she added. "Lots of Muslim women don't wear it." Basel added that she is "angry, hurt and depressed about the criticism and [that she] fears for her safety," the report added.
PLAYERS READY TO SIGN FRAMEWORK AGREEMENT FOR TRANS-AFGHAN PIPELINE PROJECT...The Karachi daily "Dawn" reported on 10 December that Afghanistan, Pakistan, and Turkmenistan are scheduled to sign a framework agreement for the Trans-Afghan gas-pipeline project (see "RFE/RL Newsline," 9 December 2002) on 26-27 December. The signing was originally scheduled for October but was postponed at the request of Pakistani President Parvez Musharraf (see "RFE/RL Newsline," 21 and 29 October 2002). Abdullah Yousaf, Pakistan's petroleum secretary, told the daily that a steering-committee meeting that was originally scheduled for 16-17 December in Islamabad has been postponed until February 2003. However, the Asian Development Bank will meet on 16-17 December "at the operational level in Islamabad to hold final discussions" on the pipeline project, he said. Afghan President Karzai "is reported to have already confirmed his availability for the tripartite summit" on 26-27 December, "Dawn" added.
In May, Afghanistan, Pakistan, and Turkmenistan signed a memorandum of understanding on conducting a feasibility study on the Trans-Afghan gas-pipeline project, which is to carry Turkmen gas to Pakistan via Afghanistan (see "RFE/RL Newsline," 31 May 2002). The project was initially proposed in 1995 by a consortium of international energy companies led by Unocal of the United States and Delta Oil Company of Saudi Arabia. However, the policies of the Taliban regime in Afghanistan forced the consortium to end its bid to build the pipeline. (Amin Tarzi)
...AS PAKISTAN APPROVES...Pakistani Ambassador to the United Nations Akram said on 6 December in New York that his country encourages the integration of Afghanistan into the region's economic-cooperation structure, "Dawn" reported on 8 December. "In this regard, we are heartened by the gas-pipeline project connecting Pakistan, Afghanistan, and Turkmenistan," the daily quoted him as saying. Akram also indicated that his country "would be prepared to explore the conclusion of a free-trade agreement with Afghanistan." (Amin Tarzi)
...BUT IRAN IS APPREHENSIVE.Voice of the Islamic Republic of Iran radio commented on 8 December that the United States has "succeeded in getting completely rid of the Taliban and Al-Qaeda" and now "plans to redeploy its forces in some other parts of Afghanistan" in order to "perpetuate its military presence in the region in a bid to dominate Central Asian gas-and-oil resources and to take control of the world markets." The Iranian state radio network cited the U.S. military action in Shindand on 1 December as an example of the new U.S. policy (see "RFE/RL Afghanistan Report ," 5 December 2002 and "RFE/RL Newsline," 9 December 2002). (Amin Tarzi)
NEW INTERNET SERVICE ESTABLISHED IN KABUL.The Dubai-based company Savanna International Telecommunication is providing "reasonably priced" Internet connectivity and a wide range of other satellite telecommunication services to the private sector in Afghanistan. Whether in Kabul or a remote Kuchi settlement, government officials, journalists, businessmen, aid workers, and even warlords can now rely on reliable, high-speed Internet connectivity and a host of additional services.
Ahmed Khan Achikzai, Savanna's chairman, said: "Today [11 December], we successfully connected our office in Kabul to the Internet backbone and had a live chat with our colleagues in Afghanistan. You can imagine that they were very pleased with having high-speed access to the Internet."
Previously, only a handful of offices -- mostly government, hotels and, nongovernmental organizations -- had Internet access provided by Pactec, a U.S. firm. "But their focus was not the private sector," explained Achikzai. "We want to reach out to the private sector, as well as NGOs and government offices."
Two Internet cafes soon to be opened in Kabul and eight other customers in Kandahar and Jalalabad will be linked up through Savanna. Each workstation will be provided with 24-hour connectivity for "a couple of dollars" a day.
Gert-Jan Panken, Savanna's manager, said: "Our customers have immediate, high-speed Internet, 24 hours a day at a fixed monthly charge. Compared to 'normal' Vsat Internet solutions, our solution can be offered at a fractional cost."
The system, which consists of a 1.2-meter dish, is connected via a satellite modem to the user's personal computer. It comes in different packages and is designed for single users or up to 20 users, which makes it suitable for both the individual user, as well as small and medium-size offices.
"We have customers in Kabul, Kandahar, Jalalabad, Mazar-i-Sharif, and Herat, so we can truly say that we bring the solution to the whole of Afghanistan," said Panken. "The reason for the focus on Afghanistan is not only due to the urgent requirement for satellite communication, but also due to the fact that Savanna's chairman is Afghan. Our mission is to provide communication solutions to Afghanistan, which will bring growth and stability."
Savanna is an Afghan-owned company with offices in Germany, the United Kingdom, Pakistan, Tajikistan, Turkmenistan, and Uzbekistan. Last December, it set up 35 outlets and distribution centers throughout Afghanistan: in Kabul, Kandahar, Jalalabad, Herat, and Mazar-i-Sharif. (T. Goudsouzian)
THIS WEEK IN AFGHANISTAN'S HISTORY9 December 1959 -- U.S. President Dwight D. Eisenhower visits Kabul for six hours, assuring Afghanistan of continued U.S. economic support. But the deterioration of relations between Afghanistan and Pakistan, and the eventual tilt of U.S. policy in favor of Islamabad, pushes Afghanistan closer to the Soviet orbit.
10 December 1992 -- Planes belonging to General Abdul Rashid Dostum bomb the presidential palace and Defense Ministry in Kabul as part of the ongoing civil war among different Afghan factions that ensued after the fall of the government of President Najibullah in April.
6 December 1994 -- A convoy of Pakistani trucks delivering goods to Turkmenistan returns to Pakistan after being freed by the Taliban from a local Afghan commander who had them stopped on 2 November in Kandahar. This rescue established the hitherto-unknown Taliban as a force on the Afghan political scene.
Sources: "Sueddeutsche Zeitung," "Historical Dictionary of Afghanistan" by Ludwig W. Adamec (Lanham: The Scarecrow Press, Inc., 1997)